I recently read an article on Medium by the Nu School on how to charge for a logo design. A common question asked by designers, creative firms, and businesses alike. When you drill down, there are only two basic ways to charge for design: by the hour or by the value. I always strive to price based on value, and here’s how & why.

Cost = Commoditization

Think about it, when the conversation is focused on cost (a very negative connotation), not value (a positive connotation), as a designer you have lost your ability to be the expert and the client will almost always end up with a less-than-optimal delivery. Why? When the conversation isn’t about the goals of the project and the value the designer will bring to the client, you have been commoditized and the focus is solely on ‘how much will it cost.” The focus should always be on “how much value can this project bring the business.”

This doesn’t mean you should shy away from talking turkey. Designers frequently are afraid to have the pricing discussion, and that’s a terrible flaw. If the focus is on value and the business goals, then there should be a clear understanding what the price should be. For example, if a business is starting out and they need the usual: logo, business card, website. I look at which of these pieces would bring the most value to the new business (hint: it’s the website), and focus my conversation on that piece. Say this business has a $20k budget for creative (how do I know this? I ask), I’ll consult with them and recommend they spend $19k on the site, and I’ll do the logo and business card for the rest. I do not outline how many revisions or how many hours it would take. Because my goal is to deliver the best work possible and bring the most value to my client and I know the site will bring that big return.

Tracking Hours Sucks

When the focus is on the hours (and cost) designers and firms want to make sure we get a solid hourly rate for our work. This trend was started, from what I’ve read, by David Ogilvy. And rumor has it on his deathbed he still regretted it. I don’t want to track hours and I don’t want to worry about hourly rates, and I never want to piss off the ghost of the greatest ad man of all time. What I DO want to do is exceed expectations and deliver immense value to my clients. If the work for my new biz client with the $20k budget takes me 20 hours or 100 hours, I don’t care, and no one else should, as long as I am bringing great value to them.

Tracking hours and cost limits profitability. That’s right, you make less $$ when you charge by the hour. And to make more money by the hour, you either have to drag the project on (more hours) or fudge the timer (lack of integrity). Neither are good. Spending more hours on a project billed hourly limits your ability to bring in new work and actually deliver on your promise. Again, no good. Who the hell wants a never ending design project? I want to deliver and get work live as soon as possible. That’s value and that’s how you positively impact your clients, while turning over projects for new ones and more profit.

You Can Sell Value with Results

Here’s a common scenario, and the bases of the Nu School article: how much do you charge for design? Well, that is easy: as much as you can! When you charge by the hour, that is impossible. When you charge based on value, the sky’s the limit. But, how can one quantify the value of the work?

Have you ever tried to sell a client on the value of spending $10k on a logo? If you have to sell them on that value, you are wasting your time. How can you prove a $10k logo design is more valuable than a $1k logo design? You can’t. They either get it (and have the funds) or they don’t. What you can (and I do) sell them on value is with results. And no better place to gather that data than the internet. Yes, analytics is the “proof in the pudding” leverage creative businesses need to validate your price and value. This is why I’ll recommend spending $19k on the website (I can prove they will get a major return on it) and $1k on the logo (even though I do bring major value to them, it is a hard sell).

So prove the value of your work with data and facts, if you are a good designer you’ll still deliver on the other design work, while making big profits on killer websites and super happy clients.

Enjoy!